is trading below its call price, so the yield-to-call is higher than the yield-to-maturity shown in the table below.

The typical floating rate preferred pays the higher of a floor rate, usually 3% or 4%, and a rate determined by a formula, typically a markup of 50-75 basis points over three month LIBOR. Most floating rate preferreds are now paying their minimum coupon rate. The last column of the table below shows how much the three-month LIBOR rate would have to rise in order forComplete Story »

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Benjamin Mackovak submits:Typically my writings pertain to unloved stocks that are temporarily mispriced which I uncover through detailed fundamental analysis. If all goes accordingly the stock will appreciate toward its intrinsic value and the “mispricing” disappears while the investor realizes a return through capital gains. However in this missive I will focus on the less glamorous underbelly of the investing world; income investing.

Thanks to some creativity on the part of Canadian Utilities Limited and lead managers BMO Capital Markets and RBC Capital Markets, some life has been breathed into the rate reset preferred share market.

Next Tuesday, Brookfield Asset Management Inc. will receive the proceeds of its latest offering of preferred shares, a $200-million issue that pays 4.85% a year. And in early December Innergex Renewable Energy Inc. will receive $50-million from a similar structured offering that pays holders 5.75%.

One week back, the U.S. Treasury Department announced it would start auctioning off two-year floating rate notes – either later this year or early next year. The news marked the first new financing product from the U.S. government in more than 15 years since TIPS or Treasury Inflation-Protected Securities were introduced in 1997.

A piece of financial history will be made next month when RioCan Real Estate Investment Trust redeems an issue of cumulative rate reset preferred trust units.
When that occurs – and holders receive the return of their original $125 million investment plus the payment of the quarterly distribution – there will be one other REIT with preferred trust units as part of its capital structure. Artis REIT raised $75 million in September 2012 and $100 million six months later.

Dundee Corp., which defines itself as “a public Canadian independent holding company” whose shares are listed on the TSX, has joined a select group of non-bank issuers.
According to John Nagel, the head of preferred share trading at Desjardins Securities, Dundee is just the second non-bank issuer, after Fortis Inc. to extend an outstanding issue of five-year rate reset preferred shares.

Next Friday, Calgary-based Canadian Utilities Ltd. will receive the net proceeds of its latest preferred share financing.
If things work out to the maximum, the company will have placed seven million shares at $25 a share – for which it will be required to pay 5.25 per cent a year. The base deal called for five million shares to be sold; with the other two million representing the underwriters’ option. The securities are not redeemable until September 2020.

The battle for the support of Rona’s preferred shareholders — who in the takeover by Lowe’s are being offered $20 per share, a $5 discount to the original purchase price — is set to get a little more interesting three weeks before all parties gather in Montreal to approve the transaction.

The parallels between the situations are very striking. What’s decidedly different is the way in which the scenarios — two about-to-be-maturing issues of rate-reset preferred shares — unfolded.
Prior to the announcements the two preferreds — like most other pref issues — were trading at a deep discount to their issue price and to their maturity value. After the announcements the price of both rose sharply, indeed both traded above the price holders are being offered.

By Valuematters:In the continuing search for yield, individuals are well served to consider preferred stocks. I recently wrote an article about some variable rate preferred securities, but the focus of this article is fixed/floating preferred shares. In general, these work as two stage securities where the first stage is a fixed yield (fixed as it relates to par value) for a certain number of years.